Tuesday, February 13, 2007

Is Netflix using a new way to throttle customers?

Many of you are familiar with Netflix, the popular online DVD movie rental service. This is how it works. Netflix customers create their own DVD movie queue. Netflix will mail the DVD movie, in the order of the queue the customer created, to the customer. The customer can keep the DVD movie as long as he likes without late fees. When the customer is finished with the DVD, he mails the DVD movie back to Netflix using Netflix pre paid envelope. When Netflix has received the DVD movie, it will send the next DVD movie on the queue.

Netflix has several plans; the 3 DVD movies at a time plan is the most popular, which Netflix charges $17.99/month. Sounds like a good until someone find out that Netflix penalizes those customers who have a high turn over rate. You see, the greatest overhead for Netfix is the postage. For those customers who receive more than 10 DVD movies/month, Netflix losses month. As a result, Netflix uses a technique called “throttling,” whereby Netflix purposely delays sending DVD movies to these customers. The idea is to curb their high turnover rate.

Supposedly, Netflix uses an algorithm to monitor customer turnover and slow down delivery as needed. However, I suspect that there is a new gimmick Netflix is using to curb turnover rate. These past 2 months, most of the movies on my queue are part of a series. For example, I have on my queue the entire third season of Enterprise. What was strange was I didn’t receive them in order. I received disc 2 before disc 1 by 2 days. Now, of course, you can say this is a fluke. However, just this week, I placed the 2 disc series for Bleach – a somewhat popular anime series – and again I received disc 2 before disc 1 by 2 days. Now, this couldn’t be a coincidence. What am I am going to do with disc 2 when I haven’t seen disc 1? Well, obviously, I have to wait until disc 1 will arrive before watching it. And there is the beauty of it. Now, I have to keep disc 2. Now, Netflix has effectively “throttled” me. What do you think?

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